Position Paper to the European Parliament's Committee on Budgetary Control

NGO Monitor

January 24, 2017

Full Article

The European Parliament’s Committee on Budgetary Control (CONT) published a study, “Democratic Accountability and Budgetary Control of Non-Governmental Organisations Funded by the EU Budget.” This study, commissioned by MEP Markus Pieper, examines issues related to the transparency, due diligence, and accountability of EU-funded NGOs.

NGO Monitor has prepared this position paper, which places the study in the context of a growing debate on funding to NGOs, highlighting the need for greater oversight and proposing recommendations for future EU conduct.

NGO Monitor commends the European Parliament (EP) initiative to examine European Union (EU) funding to non-governmental organizations (NGOs). The report commissioned by MEP Markus Pieper, “Democratic Accountability and Budgetary Control of Non-Governmental Organisations Funded by the EU Budget,” reflects an important and much needed effort on part of the EP in order to exercise oversight over a highly complex and problematic aspect of EU governance.

NGO Monitor provides information and analysis, promotes accountability, and supports discussion on the reports and activities of NGOs claiming to advance human rights and humanitarian agendas. Accordingly, the issue of governmental funding to NGOs lies at the heart of NGO Monitor’s mandate.

The EU in particular plays a key role in this pertinent and largely overlooked phenomenon, as it heavily involves NGOs in the implementation of both its domestic and foreign policies. While policy areas affecting EU constituencies such as enlargement, climate-change, and trade are discussed and scrutinized in the European public sphere, discussions regarding EU-funded NGO involvement in foreign policy areas are severely lacking. This is exceptionally pertinent considering that the EU is the single largest global aid donor, with a budget of €82 billion for 2014-2020. NGO Monitor’s unique perspective can, therefore, contribute to a more informed discussion on the seminal role of NGOs in EU foreign aid.

The following position paper will lay out, in brief, current issues regarding EU funding to NGOs, the role of NGOs in EU policy, and NGO Monitor’s recommendations for future EU conduct.

The EU and NGOs – a Growing Public Debate

The nature of the relationship between the EU and NGOs has increasingly attracted the attention of scholars, policy experts, and decision-makers, with many expressing serious concerns over issues of transparency and due diligence. NGO Monitor’s extensive research on the involvement of NGOs in the Arab-Israeli conflict is highly relevant in this regard, having uncovered a number of inherent problems in EU funding mechanisms that have implications for the EU’s overall policies.

The EP report mentioned at the outset echoes many of NGO Monitor’s own findings – namely, the absence of a clear and singular definition of an “NGO,” lack of transparency, inconsistency in EU reporting as well as in EU policy objectives, uneven distribution of funds, interconnectedness among grantees, and insufficient oversight.

Beyond merely compromising effectiveness, these and other failings result in a negligent selection of beneficiaries that pollutes EU decision-making and ultimately distorts public discourse. Research conducted by NGO Monitor and others reveals that in a number of policy areas, EU funding is repeatedly channeled to NGOs that promote a narrow set of radical ideologies that openly work against official EU policies and interests. These NGOs, profiting from enhanced capabilities and legitimacy, employ fearmongering, inflammatory, and misleading rhetoric, propagated with the help of EU public money.

In its report titled “Manufacturing Discontent: The Rise to Power of Anti-TTIP Groups,” the Brussels-based European Centre for International Political Economy (ECIPE) notes that it is “almost impossible” to retrieve information as to the EU’s decision-making process of grantee selection, the terms and conditions on which funds are provided, or the manner in which grantees’ activities are monitored. The report additionally stresses that, “More importantly, no information is given about whether NGO interests are in line with the political objectives of the European Commission” (p. 77, emphasis added).

EU risk and science communications specialist David Zaruk similarly argues that “there needs to be some overarching scrutiny on the process of funding activists that would encourage transparency and accountability. At the moment, many activist groups are getting European public money to act against the public interest (without proper scrutiny from EU institutions).”

Additionally, many EU-funded NGOs successfully promote fringe agendas within EU policy circles – effectively utilizing EU funds to lobby the EU, not only in order to enhance their respective agendas but also, in a clear conflict of interest, for more funding. According to the EP report, of the 40 NGOs identified as most active in lobbying EU institutions, “22 declared having received grants from the EU during the last financial year they reported in the Transparency Register” (p. 29).

In addition to funding, NGOs are granted significant leeway in exercising their influence, as they are automatically perceived as serving the “public good” due to their non-profit status. However, while NGOs do not officially pursue material gains, they are not necessarily steered by public opinion or public interest. Thus, by funding the lobbying efforts of organizations that are neither accountable to voters nor subject to scrutiny, the EU often funds its own radicalization in clear defiance of the democratic process.

As stated by strategic and public affairs expert András Baneth, “There is a strong case to give public support to civil society organizations involved in EU enlargement, development policies or scientific discussions, but funding activist groups whose primary, and sometimes only mission is to lobby EU policy makers and stakeholders is not justified.” The far-reaching implications of this practice are illustrated by a study of the London School of Economics cited by Baneth, which found that “Contrary to popular opinion, business actors are less successful than citizen groups at lobbying EU legislators.”

The direct outcome of this undemocratic process is a gravely uneven distribution of funding favoring a small number of like-minded NGOs from a handful of Member States. Development media platform Devex published an article in 2015 addressing this very issue, stating, “In a letter to European Commissioner for International Cooperation and Development Neven Mimica seen by Devex, development NGO platforms from all 28 EU member states have complained about the ‘indirectly discriminating principles’ that affect funding for organizations in the newest 13 member states.” Reinforcing this claim, the EP report has found that of the €610 million granted to the top 28 EU beneficiaries in 2015, “NGOs from just two Member States (Denmark and the UK) account for almost 40%” (p. 8).

These and many other problems in EU funding to NGOs have justifiably attracted the attention of a number of EU elected officials, including MEPs Markus Pieper, Inge Grässle, and Patricija Šulin.

NGO Funding and Foreign Policy

While vital, the public debate surveyed above only begins to address the severity of the need for greater transparency and accountability among government funded NGOs. The EP report found that almost 100% of funding commitments to the 28 top EU NGO beneficiaries “were made by EC [European Commission] departments dealing with external matters” (p. 23, emphasis in original). While the impact of EU-funded NGOs in policy areas such as enlargement, climate-change, and trade is far-reaching, it pales in comparison to the tremendous amounts of taxpayers money designated for overseas activities, more often than not also involving local partner NGOs and affecting constituencies that have no say in EU policy-making.

Foreign aid targets highly sensitive and complex regions that are historically, culturally, and politically divergent. Proper oversight of external funding presents a larger challenge, having to take into account local intricacies involving multiple stakeholders. For precisely this reason, although EU external funding to NGOs is unmatched both in scope and in gravity, debate on its impact remains limited and misinformed.

These pressing issues affect the lives of millions and call for a genuine reassessment of EU decision-making processes – and specifically the EU’s relationship with NGOs.

NGO Monitor Recommendations

NGO Monitor urges the prompt implementation of the EP report’s recommendations with an emphasis on overseas funding, and additionally submits the following recommendations:

The EU should immediately implement transparency regarding all NGO grants originating from EU funds, including releasing all documentation related to decision-making and evaluations, as well as the involvement of partner organizations.
Funding mechanisms should make proposed grants public at least 60 days prior to any transfer of funds (pre-notification) in order to allow for submission of relevant materials and for public discussion and consideration by the European Parliament.

The EU should promptly establish dedicated and independent supervisory mechanisms, particularly a parliamentary oversight committee, to review and evaluate all NGO grants and ensure due diligence.

The EU should adopt and enforce a rigorous code of conduct for EU-funded NGOs and all NGOs that contribute to its decision-making processes.

All funding frameworks should reevaluate guidelines and direct their funding to projects and organizations that promote the EU’s stated policy objectives.

The EU must revise its policy of simultaneously funding and consulting with political NGOs trusted with external matters. The EU currently relies on information provided by select civil society organizations, and fails to perform any independent fact-checking on the documents and statistics they provide. In order to ameliorate this issue, and in an overall effort to attain an accurate picture on human rights related issues, the EU should consult with a wider range of NGOs and subject their statements to careful scrutiny and independent verification. Given the numerous instances in which NGO statements have been shown to be inaccurate or misleading, caution must be exercised in repeating NGO claims in official EU documents.

The EU should make public all consultations with civil society, publishing detailed protocols, so that the role of civil society in EU decision-making is rendered transparent to the public.